Kemmsies, an expert on international trade forecasts, says that world demand for agricultural products has risen dramatically in the past few years, and shows no sign of slacking.

Ag products are often grouped into four broad categories: foods, fuels, fibers, and raw materials. They run the gamut from grains and meats to corn-based ethanol; from cereals and cotton to fresh-cut flowers; from resins and lumber to biopharmaceuticals – the staples of modern civilization. But demand for these staples by modern civilization is set to get a whole lot larger due to rising incomes in emerging markets. Consider the following statistics:

According the 2011 National Export Strategy, over 95 percent of the world’s consumers live outside U.S. borders, and a large chunk of that population – more than one billion consumers worldwide – will enter the middle class during the next 15 years. The Paris-based international Organization for Economic Cooperation and Development (OECD) forecasts that global middle-class consumption of goods will rise from $21 trillion to $35 trillion by 2020, and over 80 percent of that growth will occur outside North America and Europe.

Dr. Kemmsies agrees. “In places like China and India, more people than ever are leaving rural areas behind and moving to metropolitan areas. In the cities, they work middle class jobs and change their diets to reflect their newfound affluence. Specifically, that means eating more meat. To meet this demand, their countries must import more meat, livestock, and the grains that serve as livestock feed.”

Conditions such as these will create higher demand for agricultural exports from “breadbasket” nations like the U.S.

“China, India, Indonesia . . . these places can’t keep up with their population’s need for ag products,” says Dr. Kemmsies. “They have fewer people growing food, compounded by nationwide environmental and water scarcity issues. So they import corn, wheat, soybeans, animal proteins and so on from the world’s four biggest food providers: the U.S., Brazil, Argentina, and Canada.”

That’s potentially good news for ag exports. But will the current system of American logistics be able to accommodate the boom? The answer is “yes, with a but.”

The U.S., Kemmsies notes, has a massive untapped capacity to supply the world with food. “In some places, our country still pays farmers not to grow crops. That’s the good news. The bad news is that we lack the proper infrastructure to ship what we’re already growing. The future competitiveness of American ag exports could rest on how we address the containerization issue.”

Call it the Grand Paradox of Ag Commerce: shipping containers concentrate in regions where the greatest numbers of people live; in the U.S., this means the east and west coasts. But the great majority of food isn’t grown in these regions, it’s grown in the heartland, in states like Kansas, Idaho, Iowa, Nebraska, and so on. Therefore, a great many farmers have experienced a shortage of containers in which to ship their harvests. Or they can’t find enough containers to make their shipments large enough, and therefore economically viable. Or they have to pay for empty containers to “dead head” in from the coasts which can increase costs substantially.

“In some instances, it costs less for an ocean carrier to move a container to another country than to reposition the same container someplace else in the U.S.,” Kemmsies says. “That’s killing our nation’s potential.”

This comes as especially bleak news since the race to achieve ag export superiority has already begun. Consider that it takes 12 to 14 years to grow a forest of eucalyptus in the United States. But, due to the more agreeable climate, it only takes 5 to 7 years to grow the same forest in Brazil. “The danger isn’t just that Brazil has a more agreeable climate for farming many crops,” says Kemmsies. “The Brazilians have already implemented much of the infrastructure required to reap their nation’s harvests. If the U.S. doesn’t work fast and upgrade now, I’m afraid it’s game over for this market.”

So what’s the solution?

Kemmsies believes that one answer lies in the U.S. (and specifically the Port of New York and New Jersey) investing in more transload facilitiesat which ag products can arrive by truck or bulk rail and get loaded into containers for international shipment via a nearby port. Many transload facilities are also equipped to offer storage at reasonable fees.

“For most goods, this solves the capacity problem,” Kemmsies says. “Rather than bring containers to the goods, you bring the goods to the containers at a cost the ag producers can afford and even profit from.”

Dr. Kemmsies cites the new transloading facility that UP built in Yermo, California as the kind of operation we need to see more of in the New York/New Jersey region. The Yermo location was carefully chosen. At 100 miles east of the ports of Long Beach and Los Angeles, Yermo can wring more bang from the buck by dispatching trains and trucks northwest to service the Oakland area.

Kemmsies notes that New Orleans has begun constructing transload facilities, as well. Baltimore has them, as do the ports of Savannah and Norfolk.

“But I’d like to see a lot more of these facilities nationwide,” he says. “And specifically, I’d expect to see a lot more of them at the Port of New York and New Jersey. It would only make sense considering the number of shipping containers that arrive there on a regular basis. Imagine how productive we’d be if we took those incoming containers, loaded them with ag products, turned them right back around, and shipped them out to the world.”

Penetration and Aeration of Boxes and Packages

Plastic wrappings such as cellophane, films, shrink-wrap, and papers that are waxed, laminated, or waterproofed are not readily permeable and must be perforated, removed, or opened before fumigation. Approved packaging materials may be layered so long as perforations allow adequate Methyl Bromide penetration. Methyl Bromide is the gas used for most USDA supervised fumigations. Essentially, the packaging has to allow the gas to circulate the commodity being fumigated.

The following is a partial list of approved packaging materials:

Dry cloth

Dry, non-waxed or non-painted cardboard

Dry, non-waxed or non-painted non-glossy paper

Dry, woven fabrics and plastics

Perforated plastics with evenly distributed holes on all sides and 0.93 percent open area of surface, for example:

Holes that are 3/16-inch in diameter every 3 square inches

Holes that are 1/4-inch in diameter every 4 square inches

49+ pinholes per square inch

Plastic clamshells

Evenly distributed holes on all sides and 0.93 percent open area of Surface

Holes on top and bottom must not be blocked when clamshells are stacked (i.e. clamshells must have recesses or ridges to prevent blockage)

Transload Facilities See Exports Rise at the Port of New York and New Jersey

Transloading covers any process that moves a shipment of cargo from one means of transportation to another. At transload facilities worldwide, trucks, trains, and ships exchange cargo loads with the help of teamsters, stevedores, and special equipment such as heavy-duty cranes. Perhaps a shipment of break-bulk arrives by hopper car, gets offloaded, containerized, and shipped overseas. Or perhaps a container comes in from abroad and gets placed on a truck headed for the American heartland.

The permutations are virtually endless says Mike Morrow, Vice President of Sales at the Judge Organization, a warehouse/distributor and transload facility located at Port Elizabeth. Mr. Morrow has spent over twenty of his more than forty years in the shipping industry working in transloading. “It’s not a new business,” he says, “but it’s a business on an upward trend, and specifically on the export side. That’s been the real phenomenon.”

This sentiment is echoed by Frank Folise, another longtime port veteran and President of Resources Warehouse Miami, Inc. a transload facility located in North Bergen. Mr. Folise notes that approximately 80% of the transload business currently handled through the Port of New York and New Jersey can be attributed exports. “That’s a real switch,” he says. “Going back just a few years, the tables were turned. Time was, about 80% of the shipments we handled were imports, though the volumes were much lower.”

Both men say that export volumes could very remain steady or even rise as worldwide consumption of U.S. based agricultural products increases.

Mr. Morrow says that his firm has handled soybeans, corn, wheat, and – until recently – a lot of DDGs or dried distillers grains. DDGs are the residual grains leftover from processes such as brewing or ethanol production. Leftover mash is dried and subsequently sold for many purposes, including livestock fodder.

“DDGs were a big market for a while,” Mr. Morrow says. “But a recent Chinese anti-dumping suit created a lot of upheaval.”

Currently, the Judge Organization exports large quantities of paper products. Here again, the need for transloading plays a key role in the ag pipeline.

“Over the last couple of years,” Mr. Morrow says, “we’ve gotten heavy into bales of wood pulp used for newsprint and the like. A lot of that business used to go to the west coast. But now it’s coming [to the Port of New York and New Jersey] because the number of containers you find here, the efficiency of transloading services, the frequency of vessels sailing, and so on allow the customer to compete in the marketplace.”

“It used to be that steamship lines would provide containers whenever and essentially wherever you wanted them,” Mr. Morrow notes. “But that model has changed. The lines don’t maintain as many depots as they used to. So the alternative used by ag producers, for example, has been to move product via hopper cars to a transload facility where we containerize it.”

Transloading at the Port of New York and New Jersey is currently a small, close-knit community. “We’ve shared customers with other firms,” Mr. Morrow says. “Situations where a customer was having difficulty getting their freight through so we shared responsibilities. From my perspective, that’s healthy. You’ll always get people who refuse to talk to their neighbor, but most of the other firms I deal with seem to understand that, as an industry, we rise and fall together.”

“If the availability of containers and services here at the Port of New York and New Jersey continues,” says Mr. Folise, “I see no reason why this trend shouldn’t continue. I would expect to see more companies getting into the transloading game.”

Industry Panel Touts Intermodal as Efficient Means to Move Cargo

The best days for shipping by intermodal rail may well lie ahead according to a variety of industry experts who participated in a series of talks held in Atlanta this past November 13 – 15.

During a panel discussion a the conference held jointly by the Intermodal Association of North America, the National Industrial Transportation League, and the Transportation Intermediaries Association, Richard M. Larrabee, The Port Authority’s director of Port Commerce noted how the percentage of TEUs moved by truck continues to shrink at the Port of New York and New Jersey.

“Rail volumes from our port have grown at a compound annual rate of 14.6 percent over the past 20 years,” Larrabee notes. “Meanwhile overall cargo growth at has grown by only 5.6 percent.”

When asked how the forecast 2014 completion of the Panama Canal expansion will impact these figures, Larrabee says that higher demand for intermodal service is likely. Moreover, he says, the Port of New York and New Jersey has been planning for this for years.

“No other East Coast port has more first-in or last out calls than we do,” confirms Peter Zantal, a manager for analysis and strategic relations in Port Authority’s port commerce department. “Our marine terminals have access to on-dock rail facilities that can move goods between ship and rail in the same day. One of the greatest catalysts to success has been our continuing partnership with rail carriers like CSX and Norfolk Southern.”

Mr. Zantal cites some salient statistics. For instance, containerized ag exports shipped through the Port of New York and New Jersey are currently up 19.3% from last year’s totals. And now, using the Port Authority’s ExpressRail system, cargo can move from Shanghai to Columbus, Ohio in 24 days. From Busan, South Korea to Chicago in 23 days. Genoa to Pittsburgh? Thirteen days. Rotterdam to Detroit? Eleven. We can move freight from Izmir, Turkey to Chicago in 18 days, from Genoa in 13 days, and from Antwerp in only 10.” Mr. Zantal notes that transit times are comparable for exports.

“And what a lot of people don’t know,” he says. “We offer a variety of lanes to points west of the Chicago Gateway We see containers going transcontinental from our port to Seattle, Tacoma and the Los Angeles area.

The investment appears to be paying off. Nationwide, volumes of intermodal cargo increased by 4.8 percent this year over last. However, they increased by 12.3 percent at the Port of New York and New Jersey. September and October of 2011 turned out to be the second and third best months in ExpressRail history respectively. September marked the close of the most successful quarter in ExpressRail history, while October marked the 22nd consecutive month of growth.

The latest year-to-date statistics available (ending October 2011) show Express Rail already surpassing the number of lifts in previous years’ operations. The same statistics show ExpressRail’s growth nearly tripling overall container growth at the Port of New York and New Jersey.

“We’re excited to have ExpressRail play an ever greater part of our business,” says Mr. Zantal. “As a means of shipping cargo, ExpressRail helps our customers realize savings in time and money in an environmentally sustainable manner. The importance of all this will become even more profound if fuel prices continue to rise.”

Representatives for Norfolk Southern and CSX agree that the future of intermodal looks bright. “Norfolk Southern looks forward to increasing the portfolio of services we offer through the Port of New York and New Jersey,” says Ed Elkins, Director of International Marketing for Norfolk Southern. “You can expect to see us roll out new intermodal services to the Ohio Valley and upstate New York in 2012 and 2013.”

“CSX is excited about the prospects for growth in the next few years,” says Carl Warren, Director of International Sales for CSX. “We consider The Port Authority of New York and New Jersey central to achieving that vision. The investments made in the ExpressRail system will provide our customers with a compelling advantage in the marketplace as CSX continues to add services. We think the port will grow in conjunction with our newly opened NW Ohio Intermodal transfer facility. And in 2012, CSX will increase train frequency by 50% in the critical Chicago to New Jersey lane, as well as expand the number of inland destinations we serve.”

CBP Creates Streamlined Cargo Examination Stations

U.S. Customs and Border Protection has stated that, effective January 9, 2012, four new Centralized Examination Stations (CES) will be the only facilities used to perform examinations for seaport cargo passing through the Port of New York and New Jersey. The move to create these new facilities reflects a change in the way CBP and marine terminal operators will conduct their business.

“We’re always looking to conserve resources and offer better service,” says Tony Maresca, Deputy Chief Officer for U.S. CBP assigned to the Port of New York and New Jersey. “This new examination process will increase speed and efficiency for both our agency’s personnel and the port community.”

Members of the trade community agree. “Like many government agencies, CBP is trying to figure out how to address a mission that’s growing more multi-faceted on a daily basis while sticking to a budget that’s either staying flat or decreasing,” says David Schlenger, Vice President and Director of Operations for American Cargo Express. “Moving these examinations offsite is smart in that it will help CBP make better use of its resources.” Mr. Schlenger also serves as President of the NY/NJ Foreign Freight Forwarders & Brokers Association.

In the past, CBP officers would travel back and forth between marine terminals on an ad hoc basis to conduct cargo examinations. When demand increased, CBP personnel often found themselves scattered while straining their equipment allocations.

“Primarily, the new plan consolidates two types of exams: agricultural checks and those that warrant our Anti-Terrorism Contraband Enforcement Team (A-TCET),” says Mr. Maresca. “The cargo will be brought to the CESs where our teams can examine it almost immediately. We’ll run four operations rather than twelve. Apart from producing faster examination turnaround, this move also allows marine terminals to free up more space to move and store their cargo.”

Mr. Schlenger says that he’s pleased with the level of participation CBP sought from the trade before making the switch. “CBP at the Port of New York and New Jersey has always done an excellent job of dialoguing with the trade,” he says. “They were very proactive in seeking counsel from us regarding the new CESs.”

Mr. Schlenger says that NYNJFFBA set up a 15-person subcommittee of trade members that offered advice both publicly and privately on the establishment of the new CESs. “CBP was open to hearing our comments and views,” Mr. Schlenger says. He also commended the efficacy of the Port Authority’s Port User Group, a roundtable comprised of representatives from all major entities operating at the Port of New York and New Jersey for the betterment of communication and the sharing of ideas.

The Port Authority has been working closely with CBP and the trade community on the implementation of new CESs, and will continue to do so for the duration of the process.

Mr. Maresca notes that many tentatively selected CES operators already have experience in the field, a factor that will likely limit their learning curve as the program gears up. “The biggest challenge is having new operators learn to perform NIIs, or Non-Intrusive Inspections.”

During an NII, cargo containers are x-rayed to give examiners a look at the contents without having to open them. “But we’ve already started training,” Maresca says, “and the results look very promising.”

New CESs will have the ability to expand their hours of operation as cargo volumes increase, and some new operators have already announced they’ll offer 24 hour service. Conceivably, a container could arrive at a CES in the middle of the night, undergo inspection, and be ready for pickup at 2 in the morning.

The impact of CBP’s increased efficiency could trickle down to the cost of shipping goods directly through our port. “As we turn goods around faster, our port becomes more attractive,” says Maresca. “Overall, we’re confident this new process will keep the Port of New York and New Jersey competitive on a national scale.”

As of December 3, 2011, the tentative list of CES operator selectees (including the types of inspections they will perform) includes:

Board Approves 2012 Preliminary Budget

On Thursday, December 08, 2011, the Port Authority’s Board of Commissioners approved a preliminary 2012 agency budget for $7 billion in operating costs and capital plan expenditures. In a clear nod toward continuing worldwide financial challenges, the preliminary budget keeps operating expenses virtually flat and maintains the agency’s headcount at the lowest levels it has seen in 40 years.

Port Authority Chairman David Samson said, “This is an austere budget that allows us to maintain our core mission of enhancing regional mobility, while also making investments in the region’s economy to generate quality jobs during these difficult economic times. This budget advances critical, priority projects now during the time we complete our review of the agency’s long-term capital needs and priorities.”

One challenge the agency is facing head on is to attract further economic prosperity to the region and to strengthen its position as the leading East Coast shipping port during tough financial times.

Said Port Authority Executive Director Pat Foye, “Given the state of the economy, this budget looks to do more with less while continuing to make important capital investments. We’re also looking for ways to get our projects off the drawing board, and to market quicker to capitalize on the jobs and economic activity that our investment dollars generate. We recognize that the need to make improvements and provide economic stimulus is as great now as it has ever been.”

The preliminary 2012 budget allocates $3.66 billion for capital spending. These monies are slate for significant and focused improvements to the agency’s vast network of transportation facilities, which includes bridges, tunnels, airports, the PATH system, and seaports. The preliminary budget also directs funding to continue progress at the World Trade Center site.

Other allocations include $2.56 billion for operating expenses, $832 million for debt service, and $45 million for other expenses.

Said Port Authority Deputy Executive Director Bill Baroni, “When we made the difficult decision earlier this year to ask our customers to pay more in tolls and fares, we did so with a singular purpose: to deliver upgrades and enhancements that directly benefit those same customers. As stewards of the public’s money and operator of many key facilities of the region’s transportation network, it is our responsibility to meet our mandate by investing in a prosperous future for the region.”

At the direction of Governors Andrew Cuomo and Chris Christie, the agency has begun an organization-wide review and audit led by the Special Committee of the Board.